23 June 2008

Botswana: Young Farmers Fund Makes Strides

The Citizen Entrepreneurial Development Agency (CEDA) Young Farmers Fund have received 250 applications worth P100 million since its launch in April last year.

The fund coordinator, Thabo Thamane revealed that only 102 applications worth P35 million were approved while 70 projects valued at P28 million were rejected. He said they are still processing 50 projects worth P20 million. The fund can give a maximum loan of P500,000 repayable over a 10-year period at a fixed interest of five percent.

The majority of approved projects deal with cattle breeding. Others are investments in horticulture, poultry, piggery, dry land farming and small stock. About 60 percent of the young farmers are male while 19 percent are female. The rest of the loans were given to companies which are owned jointly by young men and women.

Thamane said some of the projects were rejected because they were not structured properly. He said some young applicants want to invest in assets that do not add value like cars at the inception of projects. Other projects were rejected because they would be strained by the costs of transport or when the market of the produce is not sustainable. Projects already initiated by other applicants in a certain area were also rejected. "We encourage them to go for niche products," Thamane said. The fund encourages applicants to cluster their projects together in order to share resources and reduce costs. The fund is worried by projects where parents seem to be in the forefront.

Thamane said they want the projects to be run by young people. He said they have realised people are charging exorbitant fees for undeveloped plots and encouraged the youth to apply for land from the land boards. He indicated that when the fund started, they realised that there was a problem of land. They approached the former Lands Ministry and land boards to resolve the problem.

Thamane applauded the land boards for being helpful to the fund and its clients. He said the Ministry of Agriculture has played a crucial role in helping the fund. Fund officials encourage applicants to seek advice from the Ministry of Agriculture.

The ministry has waived fees for soil testing for young farmers fund applicants while Local Enterprises Authority (LEA) has provided guidance in drafting business plans.

One of the greatest challenges facing the scheme is infrastructure development. Other challenges are inaccessible roads; and the unavailability of electricity and water and shortage of agricultural mentors. The problem of agricultural mentors has forced the fund to go outside the country for collaborative expertise.

Thamane said the capital expenditure of putting power at farms is high. The CEDA official said at times they had drilled boreholes for applicants only to hit a blank. The fund intends to utilise the experience of old subsistence farmers in the country.

Thamane said some of the applicants have done well and have started repaying the loans. He said the default rate is very low as most of the projects are at the implementation level. Thamane said they have put up an effective monitoring system.

"We can identify the early warning signs in time." He said when they visit projects, they invite officials of the Ministry of Agriculture.

The beneficiaries of the fund are offered training before the project starts. The Ministry of Agriculture sends the young investors for attachments in established farms while CEDA offers theoretical training. Thamane said they have taken some of their clients to South Africa.

He said they have started arrangements with the Department of Culture and Youth to top up the P50,000 grant that they avail to young people who want to venture into agricultural enterprises.

He said they have started to assist young farmers who benefited from Kgalagadi Breweries Kick Start project. He stated that 80 percent of their clients are from the rural areas. He indicated that the Gaborone region has not shown much interest in the fund as compared to the rural areas. The CEDA official said this could be due to the fact that it is easier to acquire land for agricultural purposes in the rural areas than in towns.

One of the major objectives of the CEDA Young Farmers Fund is to foster youth enterprises in agriculture through effective pursuit of opportunities in the sector. The fund aims to encourage the development of competitive and sustainable youth enterprises. It is meant to create sustainable employment opportunities for young people through the development of agricultural projects.

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